How can I rebuild my credit rating after bankruptcy?

Dear James,

I have just finished my bankruptcy. How do I start building my credit rating?

Nick, Trowbridge

Dear Nick,

Great news about your bankruptcy being discharged. You can now start planning for the future, which should certainly be the focus for your credit report. Assuming it was a 12-month order, the actual bankruptcy will stay on your report for a further five years. The Insolvency Service should already have told us about the discharge, but just check your report to make sure. Even though you are no longer bankrupt, the fact that you were recently is likely to seriously restrict your options as far as new credit is concerned. Of course, once the bankruptcy drops off your report things should improve dramatically, although you should be aware that some lenders might continue to ask you if you’ve ever been bankrupt. When you check your report there are a few other things you should look at. While you can expect to see separate records on your report of debts that were included in your bankruptcy – this is standard practice – these should now be updated to indicate no outstanding balance. If any haven’t been updated, either ask us to raise a dispute or contact the lender or lenders yourself direct. Defaults also stay on your report for six years and in this case they should all pre-date the bankruptcy order, so should have disappeared by the time the bankruptcy goes. You might also consider adding a short statement to your report explaining why you got into difficulties in the first place. If you do apply for credit while the bankruptcy and other debts are still showing, this will put things into context and may help you. It will be a great help if you can obtain some credit facilities and manage them well over the next few years. If you don’t do this, when the bankruptcy goes you’ll be left with an empty credit report, which won’t help you at all. Lenders do like to see some evidence you can be trusted to repay credit on time. So see if you can get a credit card aimed at people with damaged credit histories and then use that to build up some positive information. Then you could try adding a mobile phone contract. There is more detailed advice on bankruptcies and how they affect credit ratings in our bankruptcy fact sheet. Good luck. (November 2012)


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